A subcontractor agreement for a service company is different from the one a general contractor signs with a framing crew. Your sub is not building one project. They are running dozens of small visits in your customers' homes, sometimes under your name, on pay terms that repeat every week. The terms that matter are the ones that come up every week: who the customer thinks they hired, when the sub gets paid, who goes back when the fix fails, and what happens if the sub's insurance lapses on a Tuesday.
Important. This page is a checklist of terms to discuss, not a legal document. Do not copy it into a contract. Agreement law, worker classification and insurance requirements vary by state. Have an attorney licensed in your state draft or review the agreement, and talk to your CPA about classification and tax reporting.
How to use the checklist
Sit down with the sub (or a call with both owners) and go through each line. Write the answer next to it in plain words. When every line has an answer, send the list to your attorney. That meeting usually takes an hour. It saves the much longer conversation that happens after a callback nobody agreed to pay for.
If you are still deciding whether this work should go to a sub at all, read subcontract vs hire first. The agreement is easier to write once you know why you are using subs.
The checklist
1. Parties and relationship
- [ ] Legal names of both businesses, entity type, and addresses
- [ ] Who signs for each side
- [ ] A statement that the sub is an independent business (your attorney words this; the facts of how you work together matter more than the label)
- [ ] Whether the sub may work for other companies, including your competitors
- [ ] Start date, length of the agreement, and how either side ends it (notice period)
2. Scope of work
- [ ] Which job types the sub will take (list them, for example "drain clearing, water heater swaps, no gas line work")
- [ ] Which job types are excluded
- [ ] Service area: ZIP codes, cities or a radius
- [ ] Who supplies parts and materials, and at what markup or cost
- [ ] Who supplies equipment, and who pays if your equipment is damaged
- [ ] Who pulls permits and schedules inspections
3. Scheduling and dispatch
- [ ] How work is offered (a call, a text, a shared schedule) and how quickly the sub must accept or decline
- [ ] Whether the sub can decline a job without penalty
- [ ] Arrival window the customer was promised, and what the sub does when running late
- [ ] Who texts or calls the customer about arrival
- [ ] What happens on a no-show by the sub, and on a no-show by the customer (trip charge, who keeps it)
The scheduling terms are where the relationship actually lives. A sub who is booked into times they cannot reach will be late, and the customer blames you. Our guide to scheduling 1099 crews covers how to offer work into a sub's real open time.
4. Pay terms
- [ ] Pay basis: a percent of your price, a percent of the sub's list price, a flat amount per job type, or hourly
- [ ] What counts as "the price" (before or after discounts, parts, trip charges, tax)
- [ ] When pay is due: number of days after the job is done (net 0, net 15, net 30)
- [ ] How the sub invoices you, or whether you issue a statement
- [ ] What happens if the customer does not pay you (the sub still gets paid, or does not)
- [ ] How disputes over a single job's pay are raised and settled
- [ ] Who handles deposits collected from the customer
5. Credentials and insurance
- [ ] Trade license required for each job type, and who verifies it
- [ ] General liability limits you require, and whether you are named as additional insured
- [ ] Workers' compensation, or the sub's state exemption, if they have helpers
- [ ] Commercial auto coverage
- [ ] How the sub notifies you before a policy or license lapses
- [ ] What happens to scheduled jobs if a credential lapses (they are reassigned, not run)
- [ ] Background checks, if your customers or commercial clients require them
Collect the documents themselves with our subcontractor document checklist.
6. Branding and the customer
- [ ] Whose name the customer sees: on texts, invoices, the truck, the shirt
- [ ] Whether the sub may hand out their own card or quote extra work directly
- [ ] Non-solicitation of your customers, and for how long (enforceability varies widely by state)
- [ ] Who owns the customer record and service history
- [ ] Photo and job note requirements at completion
7. Quality, callbacks and warranty
- [ ] Workmanship warranty period the customer was promised
- [ ] Who goes back on a warranty callback, and whether the return trip is paid
- [ ] Deadline for the sub to return on a callback
- [ ] What happens if the sub cannot or will not return
- [ ] How damage to the customer's property is reported and handled
8. Ending the relationship
- [ ] Notice period for either side
- [ ] Immediate termination triggers (lapsed insurance, safety violation, customer complaint threshold)
- [ ] How jobs already on the schedule are handled after notice
- [ ] Final pay for completed work
How to adapt it
For a one-person 1099 contractor. Sections 1, 4 and 5 matter most. A sole operator often has no workers' comp because they have no employees; your attorney and your insurer will tell you whether your state or your policy requires something anyway. See the 1099 subcontractor definition for the classification background.
For another company with its own techs. Add terms on which of their techs may run your jobs, whether they may pass your job to their own partner, and how they confirm each tech's credentials.
For overflow only. If the sub only takes peak-season overflow, keep scope narrow and pay simple (flat per job type). Complex percent terms are worth it only when volume is steady.
If you run subs through CrewLink's CrewConnect, both owners agree to the exact pay terms (percent of the partner's list price or a flat amount, due 0 to 90 days after the job is done) before work is sent, and the sender can require license, insurance or certification so a person whose credential lapses before the job date is not offered. That covers the mechanics of sections 4 and 5. It does not replace the agreement. More on how that works on subcontractor scheduling.
What to take away
- Use this list to make decisions with your sub, then have a lawyer in your state turn them into an agreement.
- The terms that cause fights in service work are pay basis, due days, callbacks and whose name the customer sees.
- Write down exactly what "the price" means before applying a percent.
- Decide in advance what happens to scheduled jobs when a credential lapses.
Common questions
Is there a free subcontractor agreement template I can just use?
Generic templates exist, but they are usually written for construction projects and miss the terms that matter in repeat service work, like callbacks, branding and net pay days. Use this checklist to decide the terms, then have an attorney licensed in your state draft or review the document.
Does a signed agreement make someone an independent contractor?
No. The IRS looks at the whole relationship, including behavioral control, financial control and the type of relationship, not only the paperwork. See the IRS guidance on independent contractors (checked October 2026) and talk to a CPA or attorney about your situation.
What pay terms are normal for service subcontractors?
There is no single standard. Percent of price and flat per job type are both common, and due days range from same day to 30 days or more. Pick what you can pay reliably every time; late pay loses good subs faster than low pay.
Should the agreement say who answers callbacks?
Yes. Name who returns, how fast, and whether the return trip is paid. Unwritten callback rules are one of the most common reasons service partnerships end.